PM 'Has Nailed His Policy Colours To The Mast', Shorten Says

SYDNEY, AUSTRALIA - MARCH 21: The Leader of the Australian Labor Party Bill Shorten addresses the media on March 21, 2016 in Sydney, Australia. Prime Minister Malcolm Turnbull earlier announced his decision to recall parliament early to vote on industrial relation legislation. The Prime Minister said he would call a double dissolution election, to be held on July 2, if the legislation if the bills are not passed. (Photo by Matt King/Getty Images)

The federal opposition has labelled Prime Minister Malcolm Turnbull's backdown over proposed income tax changes as "humiliating" and has promised that a Labor government would never try to slug Australians twice with the tax.

On Friday, Turnbull sensationally dumped his controversial plan for the states to collect income tax directly after a lack of support from state premiers at the latest Council of Australian Government (COAG) meeting.

The Prime Minister earlier in the week hailed the plan, that would see states take over the federal government's responsibility for collecting income tax, as a "once in several generations reform" on tax.

Turnbull said the failure to move forward on the proposal was because there was "not a consensus among states and territories to support further consideration of the proposal".

Shorten described the backtrack as an "humiliating farce" for the PM.

"On Wednesday (he said) he had an idea that was going to be the best reform ever to federation, the crazy idea of double taxation allowing state income taxes to be levied on working Australians only to drop it temporarily by Friday," he told reporters on Saturday.

"The real problem here is that Mr Turnbull wants to move on from the train wreck of this week with his outlandish idea to have double taxation but Australians won't let him move on so quickly. Mr Turnbull has nailed his policy colours to the mast."